Good morning and welcome to the Brown & Brown Incorporated Second Quarter Earnings Call. Today's call is being recorded. Please note that certain information discussed during this call, including information contained in the slide presentation posted in connection with this call, and including answers given in response to your questions may relate to future results and events, or otherwise be forward-looking in nature. Such statements reflect our current views with respect to future events, including those relating to the company's anticipated financial results for the second quarter of 2015, and are intended to fall within the Safe Harbor provisions of the securities laws. Actual results or events in the future are subject to a number of risks and uncertainties, and may differ materially from those currently anticipated, or desired, or referenced in any forward-looking statements made as a result of a number of factors. Such factors include the company's determination as it finalizes its financial results for the second quarter of 2015 that its financial results differ from the current preliminary unaudited numbers set forth in the press release issued yesterday, other factors that the company may not have currently identified or quantified, and those risks and uncertainties identified from time to time in the company's reports filed with the Securities and Exchange Commission. Additional discussion of these and other factors affecting the company's business and prospects, as well as additional information regarding forward-looking statements is contained in the slide presentation posted in connection with this call and the company's filings with the Securities and Exchange Commission. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. With that said, I will now turn the conference over to Powell Brown, President and Chief Executive Officer. You…

Yes, thank you. And we'll go first to Kai Pan from Morgan Stanley. Kai Pan - Morgan Stanley & Co. LLC: Good morning. First question is about your employee benefit business. Looks like you're under a little bit pressure from ACA implementation. I just wonder what's your view about the process of implementing ACA for your small accounts. And do you expect that like they will – like move more towards the public exchange? And also related your comments on the recent proposed merger between Willis and Towers Watson, what would that impact your liaison relationship? Thanks. J. Powell Brown - President, Chief Executive Officer & Director: Okay. The first question, relative to ACA, is I believe that many small employers are all over the board in terms of their preparation, some are behind and being – getting ready for next year, some are on their way and some are already there. I do not think that ACA in and of itself is going to expedite more public exchanges as much, I mean that will be part of it, but I do think that private exchanges will be another alternative. The reason I say that about public exchanges is, as you've read in the paper, a number of those exchanges are experiencing rate increases and they will continue to experience rate increases, we believe, because of the unfavorable loss experience many of them have had over the last year due to the number of people in those pools. Having said that, I would reiterate that the private exchange is an option, not the option. And so we believe that it is, one, a technology play; two, a coverage play; three, a compliance play. And you wrap all that up and that is appealing to some smaller businesses. But we are…

And we'll take our next question from Michael Nannizzi from Goldman Sachs. Michael Nannizzi - Goldman Sachs & Co.: Thanks. Just a follow-up and just one follow-up on Kai's question. Is there an expiration on the authorization? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: There is no authorization on the $400 million. There was an expiration or there is an expiration on the original $200 million, which we have $50 million left, which is the end of this year. Michael Nannizzi - Goldman Sachs & Co.: Got it. And then I thought I remembered the – you guys had an ASR that you announced in March and that it was expected to settle in the second quarter. It doesn't look like that came through. So, is that, Andy, maybe what you're insinuating that that's going to come through in the third quarter? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah. So that was the – Michael, that was the $100 million ASR that we did just at beginning of March in the first quarter based upon volume in the marketplace and the purchasing that was being done – that would be done by the end of June. It looks like right now, somewhere around the end of July, maybe the middle of August, all really depends upon volatility that's out there. Michael Nannizzi - Goldman Sachs & Co.: Got it, okay. And then, I mean, is it – I'd guess and just given those parameters of volume, et cetera that it would be unlikely to do more than that in the third quarter. Is there still the ability just given that it's a sort of a pre-arranged transaction that you could also be in the market next to that transaction? R. Andrew…

We'll take our next question from Elyse Greenspan from Wells Fargo.

Hi, yes, just a few questions. But first, I wanted to spend a little bit more time on the organic growth within the Retail segment in the quarter. I know you guys pointed out that change and more discretion in Washington and then also some of the downward trends within the employee benefits, both especially with the small businesses. I'm just – it seems like some of that was also creeping up in the first quarter as well. So, I just warrant anymore information you can give us on what kind of drove the sequential downward trend within that Retail organic growth. And then just thinking out, I guess for the balance of this year, just directionally, I guess, do you expect kind of where we're sitting today, would you expect the retail organic growth to improve from what we saw in the second quarter? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So, Elyse, the first thing about the impact of Washington, I think, we laid out pretty clearly, it was a $1 million impact in Q1, it was $1.2 million in Q2 and we believe that it will be a $1 million impact in Q3 and Q4. As it relates to other than what generally occurring in Retail, I would tell you the two things that kind of were a draw or a negative draw on Retail this particular quarter, one, as you heard us say cat property rates are down 10% to 25%, that's a small portion of it. And, we had some loss business, and so you heard me talk about couple offices in the first quarter that were underperforming. And we continue to work on those underperforming offices, one quarter does not fix something. This is a multi-quarter strategy. So, I have said, and we have said that we believe that our business in Retail is a low to mid single-digit organic growth business. And so that's something that we're working very actively on growing more than it was this quarter and more than it was in the first quarter.

Okay, great. And then back to just some comments that you guys made on the margins in terms of also you pointed to investments and I guess, the overall – I guess, in terms of seeing potential margin deterioration, it seems like in the next few quarters. So I'd assume that that's a comment, I guess, specifically to the overall company and then also within the Retail segment. So you're thinking as we're thinking of our models that we'll probably see your margins deteriorate, I guess, until Q1 in 2016, just any more info in terms of directional there on the margin side? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: No, no other direction, probably, Elyse, other than your comments that you made there with it. We're very, very positive about everything that's going on inside of the business. We see great activity in all the core areas of what we know that's going to drive long-term growth and profitability force, sometimes it doesn't happen in the immediate quarter. We'd all like to add that one that we can put over the top, it doesn't work that way, but everything is looking positive on the activities and that's why we feel really good about the business and it will come back in the appropriate timeframe.

Okay. And then in terms of continued commissions, those were a bit higher this quarter, but you'd pointed to seeing the continued slowdown in the back half of the year, has anything changed on that front? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: No, nothing from our previous comments. I said, we picked up a little bit in programs in the second quarter. We do expect the fourth quarter to be down, so again just make sure everyone is captured that in their models and that will primarily be in programs related to our force-place business. Again we've got advance notice from Lloyd's that we will be down year-over-year so – and their ranges are still what we previously communicated.

Okay. And then lastly, do you have the share count on the diluted share count at the end of the quarter? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah, hold on one second, we'll give you – it's just a little over $143 million. Remember, we have the two-step methodology, Elyse. So if you look on our face, it's going to show the $139 million in there, but if you (40:45) we've got to allocate revenue or income to the participating shares. So, just a little over $143 million.

Okay. Perfect. Thank you very much.

We'll take our next questions from Charles Sebaski from BMO Capital Markets.

Good morning. J. Powell Brown - President, Chief Executive Officer & Director: Good morning.

Couple of questions. I guess, first, I'd like to hoping to get better understand the investments in people and I guess one sort of how many people you're talking about. And two, I mean, I guess my understanding of how the business works is that there is continual churn in the business, producers come and go, you're hiring, people leave, et cetera. I guess what is different now that we're kind of getting a itemized, hey, there is a margin impact due to hiring? Is this seasoned veterans, is there's an increase in the development of young talent? What is change, where we're seeing this in the margin where we might not have seen this in the margin in years past? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So as you know, we have historically and continue to hire people from other industries that we believe can be successful in our business and we teach them insurance. So in your vernacular, I think, development of new talent is the predominant investments that we're talking about. And so we do that all the time, but we're doing more of it right now. You made a comment about the number of seasoned people, and we do do that on a sporadic or limited basis when we find very talented people that we think can fit culturally in our system. So we have made some of those investments as well. You've heard me make that comment in quarters past, specifically around Beecher Carlson, but it is not exclusive to Beecher Carlson, it is across the entire platform. And so, we have been sort of signaling this over the last several quarters that we are continuing to invest in our platform. And when I say invest, you might say, we are over-investing now relative to the historic levels. And so that is out of need, that is out of opportunity, that is out of – we think, there is – there are some people that are and will become available that will be potential good additions to our team. So I don't think, Charles, this is new, but it is new in the sense that we're saying that we are investing more in people, we are actually doing both steps, which is new talent, new to the industry and existing talent that fits culturally, and there are some opportunistic investments that we have made and we'll continue to make in people or groups of people in the near to intermediate term. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Charles, I'd like to mention, I mean, if you go back to where we're kind of standing a year ago...

Yeah. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: ...we had almost this exact conversation when we talked about some of our investments. And one of the things that we communicated and committed to a year ago is that we would help provide you guys with more insight, that's what we're doing right now. So again this is just kind of a building story along through all of it in order to get there.

I guess what I'm curious about is, Powell, the opportunistic side versus the run rate. I guess what's going on and you talk about the acceleration and investment in people through need of the business, I guess the question is, why is this going to seize? So, why are we going to go to two quarters down and in the first half of 2016, the need to invest in the business and development of talent is going to somehow come back into line with where it was before and margins? I guess in the continuation, a continual flow of new investment as the business grows, it would seem that you're talking about it getting back to what it was and that would mean a slowdown in the investment come next year and I guess why is that versus today that's what I'm – I guess I'm somewhat challenged with? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So, like I said, we have a system that we don't talk a lot about relative to the people, because everybody does their investments differently and we think we're different. But we have ramped up our intern program, we're hiring more people off college campuses today and there are a component of opportunistic investments. So you were correct in saying that a certain level of this will always go on. That is correct. You're right. But I will tell you that today and in the future, if the right opportunities present themselves, we will make opportunistic investments in our business. So what you might be thinking is this. Let's call it what it is. There are a lot of acquirers out there, some of whom are paying what we might consider ridiculous prices in certain transactions. We are considering making investments in people, where there isn't any so-called acquisition, but bringing those capabilities and talents on to our team that is a short-term margin hit until the revenue comes with them. And so, you are correct in saying that there will continue to be an ongoing expense. But I can assure you that there are components to these investments, which are opportunistic and we will continue to explore those when we're in an environment, where acquisition pricing is up and we want to get more talent on our team in certain areas to serve our client base.

Okay. And finally, can I just ask about the size of the buyback authorization. I guess relative to the $200 million one you did last year with the ASR still going on and as you said, there's limitations on due to volume or volatility and how that can be executed, but if I think of the ASR that started in March and it's going to go through August, so you're talking about a six-month, five-month, six-month, seven-month timeframe, why $400 million? I guess if I look at the $200 million and the timeline it took, it seems to be – if I look at that just trajectory pretty long into the future and just guess any additional thoughts on the concept of where that number came to relative to cash flow or market cap or flow? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So as you know, we have $50 million of the authorization outstanding, which actually expires on December 31 of this year. And the $400 million does not have an expiration date. And so, when I spoke to the board about what we want to do, I asked for a larger authorization, which would give us more of a window to invest over time and to continue to look at it on a case by case basis as we make investments, whether we do acquisitions, whether we invest internally or whether we buy it back. There was not a – I mean, there was a discussion around free cash and market cap and all that. But basically what it was is we bought – at that particular authorization, $150 million in a year and if we got $400 million, we believe they gave us a multi-year, potentially, ability to buy our stock back, if we think it is the right time to do it. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: And Charles, I mean just, again, maybe keep in mind the $200 million that was approved last year, it was the only buyback in our history, it's the first time that the company has approved and it was executed on one. So it was an initial step and that's why, there were some parameters put around that one. Now, as Powell mentioned, we want to have the flexibility as an organization not be constrained on a specific time period, and to be able to utilize this as part of our capital allocation. Not uncommon for most companies to have an authorization at that percentage of market cap. You can go out and look at some of our peers that are out there. They're not far off on the numbers as well as other companies. So pretty common, what we've done.

Okay. I appreciate all the color. Thanks, guys. J. Powell Brown - President, Chief Executive Officer & Director: Thanks, Charles.

We'll take our next question from Josh Shanker from Deutsche Bank.

Yeah. Good morning everyone. J. Powell Brown - President, Chief Executive Officer & Director: Good morning.

My first question – good morning. My first question, I was wondering if you could talk about growth as it relates to retention by segment, it's a very competitive market always, have the competitive dynamics changed? Are you retaining more business than you have in the past in each of the segments? Are you writing more gross new business and retaining – I guess what's the math behind the retention versus churn sort of dynamics that's putting together these numbers right now? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So, what I would, on a macro level, say that there are some businesses that are impacting or drawing down on that for several reasons, depending on the actual segment itself. So let's talk about retail for a moment. We continue to write a lot of new business, but as I referenced last quarter and this quarter as well, there are several offices that have underperformed. And in those underperformance, typically what you find is, there is a higher loss business in those offices than elsewhere. So an example that we've talked specifically about would be in the State of Washington with the health plans. Now that was an action in the state, but still that's an inordinately high amount of loss business in that particular business unit this year. Is there an opportunity to get some of that back in the future? Maybe. But that was a decision made at a local or statewide basis. If you think inside of Wholesale for a moment, you have the biggest impact in Wholesale is the downward pressure on catastrophic property rates. And so, Wholesale has performed very, very well, not only this quarter, but this year and last year and grown even in the face of some of…

Okay. And in the other income segment on the P&L, it's small but in the past, we've spoken about and it was going to get a much smaller and then, there is little surprise, it looks like it did in previous quarters this quarter, is that anomaly now or should we expect other income to be smaller in the future? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah so, I think, Josh, we talked about this on previous calls. And starting this year what we assuming – starting in the fourth quarter of last year, we started reporting the gains, losses on sales of businesses down in the expense section to get rid of that noise out of revenue. All that was – should sit up inside of other income now going forward as if we have legal settlements or some sort of judgments, the number should be pretty small in nature. We had a settlement this quarter. So, again, that probably not be an area that you want to, I think everybody seems to do this, they put $1 million, $1.5 million, $2 million in there, that one is going to float up and down, it could be zero sometimes.

Okay. And do you feel this quarter is higher than average? I mean, I'm not putting average number in there it's all I can do is that do you think this quarter – I think $1 million in average or do you have any thought on that? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: This quarter would be probably higher than normal because of the judgment that we had.

Okay. Thank you very much.

We'll take our next question from Meyer Shields from KBW. Meyer Shields - Keefe, Bruyette & Woods, Inc.: Thanks. Good morning. J. Powell Brown - President, Chief Executive Officer & Director: Good morning. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Good morning. Meyer Shields - Keefe, Bruyette & Woods, Inc.: Could you talk a little bit about how – when you've got – looking at the National Programs segment, you talked about the change in carrier appetite for California workers' compensation. What's your process here for responding to that, finding another carrier or whatever? J. Powell Brown - President, Chief Executive Officer & Director: Well, we have multiple carriers that we've work with. And so, some – the – what I'm referring to you specifically is one of the larger carriers and some of the other carriers maybe able to pick up some of that. And we're constantly talking with our carrier partners to make sure that we have, to the extent possible, some overlap in some of the programs that have multiple carrier partners. And so, as I said, this is – we just used that as an example which is true that it was impacted in workers' compensation, but it could be the same in another programs as well. So we're always trying to work with our carrier partners to, one, make sure that it can be a profitable program for them over the long-term and that we can continue to write the amount of new business that we want to and retain the business we want to grow our business organically in line with what we want and what they want. Meyer Shields - Keefe, Bruyette & Woods, Inc.: Should we expect the shortfall in the quarter to then be made up when…

And we'll go next to Ryan Byrnes from Janney.

Thanks. Good morning, guys. J. Powell Brown - President, Chief Executive Officer & Director: Good morning.

I just want to add a question on Wright. Obviously, as we get to wind season here, I just wanted to – I know, you guys have given the average kind of revenue associated to catastrophes the last 10 years, but that excludes two big years, wanted to get an idea as to how big Wright's revenues were with Katrina and Sandy, just sort of to get a – just a piece of – just to have an idea of what could happen there? R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah. Maybe probably, Ryan, the way to think about that one is think about the $7.5 million incremental, that's off of those storms, because again those two storms were historic in nature, right? And so, if you go back, and again, this kind of gives a perspective and a lot of people say, wow, there should be a lot of revenue coming out of Texas. We made the comment that it was immaterial for us for the quarter. We ended up with a few – probably, in Wright, it was just a little over 3,000 claims in total for all of the storms, so it wasn't much. If you go back and you look at Sandy, we had over 20,000 claims. So these are, I mean, we are at very, very low levels right now. So unless there was a major storm or storms come through at that level, we continue to expect very low revenues in this arena. J. Powell Brown - President, Chief Executive Officer & Director: And to specifically address your question, Ryan, we don't have that right here in front of us. We could get it, but we don't have that right here in front of us relative to the – but it is substantially higher than that.

So, it will be a 2X of the average or – I'm just trying to get a ballpark. I mean I realized (01:02:58) the right way to think about it – it'd be a multiple of... J. Powell Brown - President, Chief Executive Officer & Director: I don't think it's a multiple of, but I don't think you can just say 2X, because every event is different, obviously. So I think that's kind of you're walking a tightrope on that one. But I would say, it is materially more and it could be 1X, 2X, 3X. It could depending on the size and the complexity and the devastation of the storm. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Yeah, Ryan, we're not trying to be cagey you on this one. I think we want to go back though and give you guys projections on previous storms for going forward, just because of all the variables inside of them.

Yeah, sure. Just help to see how much they could grow? And then my second question, my last question is, can you guys just maybe walk me through the thought process that you guys go through when you think about doing buyback versus doing a deal? Let's say, you have the opportunity to do a deal, let's say, again more expensive now, let's say anywhere from 10 times to 11 times EV to EBITDA and then compare that to buying your stock at I don't know 9 times, 9.5 times, how do you guys, if you have those two options, can you maybe just walk us through how you evaluate that? J. Powell Brown - President, Chief Executive Officer & Director: Okay. So, obviously there is a financial consideration of which you did some very basic math right there that would be part of it, number one. Number two, it would be – the second thing would be the capabilities and the talent of the team. And so, you have seen us make larger acquisitions announced at 10 times EBITDA that was slightly more than what we were trading at, at the time and we believe – and so we felt at the time that the capabilities that the group presented made sense for us to make that acquisition. And so we weigh the talent, the capability, the specialization, if there is a segment that we're trying to expand or get into, if it's a capability that we're trying to enhance that we have but make better or we don't have on the team, all of those are put in our considerations. We look at a number of financial metrics back in part one and that could be anything from return on invested capital to internal rates of return to…

Okay. Great. Thanks for the color, guys. J. Powell Brown - President, Chief Executive Officer & Director: Thanks, Ryan. R. Andrew Watts - Chief Financial Officer, Treasurer & Executive VP: Thank you.

And we'll take our next question from Adam Klauber from William Blair. Adam Klauber - William Blair & Co. LLC: Oh, thanks. Good morning everyone. J. Powell Brown - President, Chief Executive Officer & Director: Good morning, Adam. Adam Klauber - William Blair & Co. LLC: Couple of the questions, what's the organic rate running at and did rate help the program margin during the quarter? J. Powell Brown - President, Chief Executive Officer & Director: See, so let me go back on, so on the margins itself for the quarter is, yes it did have – I'll answer the second one first and then come back to it, is it did have a benefit or as that (01:08:47) we know that business itself has a little bit of seasonality to the profitability a little bit, but total rate, as we disclosed previously and has it's been running, is up in the 30% margin business and again it flows back and forth, anywhere it can go from a 36% to 32% in that ballpark. Second quarter generally a little bit higher and third quarter a little bit higher and... Adam Klauber - William Blair & Co. LLC: Okay. J. Powell Brown - President, Chief Executive Officer & Director: ...in that business, so some benefit inside of there. Adam Klauber - William Blair & Co. LLC: Okay. J. Powell Brown - President, Chief Executive Officer & Director: But again, we try to look at it over the full year based upon its cost base inside of there. Adam Klauber - William Blair & Co. LLC: Sure. J. Powell Brown - President, Chief Executive Officer & Director: And then, overall business is performing well. We talked about our new programs that we have inside of there within schools, foods and new National…

And we'll go next to Ken Billingsley from Compass Point. Ken G. Billingsley - Compass Point Research & Trading LLC: Good morning. I just wanted to clarify a couple of answers you had before, so it's just like a follow-up. One of those was on the workers' comp partner... J. Powell Brown - President, Chief Executive Officer & Director: Can you speak up, Ken, you're sounding really faint, sorry. Ken G. Billingsley - Compass Point Research & Trading LLC: Is that better? J. Powell Brown - President, Chief Executive Officer & Director: Yeah. You sound better. It's much better. Thank you. Ken G. Billingsley - Compass Point Research & Trading LLC: All right. So I just wanted to ask some kind of clarification questions on some comments from earlier. I know this is only one of many things you mentioned, but on the workers' comp appetite declining for that one partner, what were they seeing specifically, was it an internal issue or external issues that's causing them to back away? J. Powell Brown - President, Chief Executive Officer & Director: Yeah. I would say, I think that they saw something in a market, which was limited to a certain geographic area. And yet the filing they had didn't allow them – after they did a loss analysis in that area, the filing with the state did not allow them to address it on a geographic basis, it had to be more of a state basis. So you have that – I think that's maybe more than you wanted to know, but I would consider it a little bit of both, if that makes sense. And so, if you had a different filing, if they had had a different filing, I think they could have dealt with it differently. So, like…

That concludes today's question-and-answer session. I'd like to turn the conference back to our moderators for any closing or additional remarks. J. Powell Brown - President, Chief Executive Officer & Director: All right. Thank you, Tracy, and thank you all for your time today. We look forward to talking to you at the end of Q3 as we continue to work on our opportunities and our challenges and thank you. If you have additional questions, I know Andy will be reachable throughout the day. Thank you.

This concludes today's conference. We thank you for your participation. You may now disconnect.